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MSCI: It will be 2029 before women make up 30% of company boards

The latest Women on Boards report reveals only marginal improvement from year to year.

As at October 2018, women held only 17.9% of all directorships in companies on the MSCI All Country World Index (ACWI). While this was slightly up from 17.3% last year, it is below the predictions MSCI made in 2015.

Three years ago the index provider believed that by 2018, 19.4% of all directors would be women. However, improvements in female representation have been slower than MSCI predicted, and at the current pace of change the company believes it will be another decade before representation reaches 30%.

There are 2 694 companies in the MSCI, which covers both developed and emerging markets. This is therefore an extremely comprehensive analysis.

In this universe, 21.3% of companies still have all-male boards. This was slightly down from 22.6% in 2017, but in certain countries the number of all-male boards remains persistently high.

In Japan, 45% of companies in the MSCI index still have no female representation on their boards. In South Korea, it is a startling 83.5%. Qatar has no female directors at all in any of the 11 companies represented in the MSCI ACWI.

By contrast, South Africa no longer has any all-male boards in any of the 49 companies that make the index, and this is also the case in a number of European countries such as Spain, Sweden, France and the UK. In the US, 11 of 583 firms have no female representation at board level. That is 1.9%.

The ‘tipping point’

Studies have however shown that in order for female directors to participate on an equal footing, boards need to have at least three women. This is considered the tipping point for meaningful representation, but only a minority of companies in the index meet this requirement.

Only 32.1% of firms in the MSCI ACWI had at least three women on their boards last year. This is up from 31.5% in 2017 and 27.4% in 2016.

Only 43 companies had boards that comprised at least 50% women. That is just 1.6% of the universe.

Norway, France and Italy are the only countries where 100% of companies in the index all have at least three women on the boards. These nations have all set mandatory requirements for female representation, so it would in fact be a breach for any company not to meet this level.

In South Africa there are no requirements for women to be represented on listed company boards, but 61.2% of firms in the index do have at least three female directors.

Take me to your leader

One of the most disappointing findings of the analysis is that the percentage of female chief executive officers (CEOs) at companies in the MSCI ACWI has been effectively stagnant for a number of years. In 2015 it stood at 3.5%. In 2018 it was just 3.8%.

Of the 55 countries represented in the index, 29 had no female CEOs at all.

In only five did more than 10% of companies have a female leader. In South Africa, just one company of the 49 in the index has a female CEO.

Female chief financial officers (CFOs) are slightly less rare. In total, 11.1% of companies in the MSCI ACWI had a woman in this position last year.

However, 20 countries had no female CFOs at all. In South Africa, just 8.2% of companies had a woman in this position.

Progress may be slow, but it’s still progress

Overall, the study gives a mixed picture of female representation at board level across the world. While there are countries where progress has stagnated, many others have made impressive strides.

As MSCI notes: “Despite this overall slow pace, there continue to be several bright spots of improving representation. European countries with mandates, including Norway, France, and Sweden, continued to increase female board representation above the level required by law, with Australia and New Zealand also reaching the level of 30% of directorships held by a female.

“In the emerging markets, Malaysia and India, who both have relatively new mandates, saw increases in the percentage of directorships held by women that were considerably higher than the overall emerging markets representation.”

In South Africa, firms perform well in terms of female representation at board level, but less impressively when it comes to women in leadership roles. That is where emphasis should now be placed.

The full report can be downloaded here.

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COMMENTS   22

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I’m okay with there being all-male boards. I’m also okay with there being all-female boards. Race and sexual orientation also mean nothing to me.

As a shareholder, what I do care about is that you’re making me money. That is all.

There is clear research that shows that the number of women on boards has a clear impact on financial performance and other important metrics.

Read here: https://www.msci.com/www/blog-posts/women-on-boards-one-piece-of-a/0872932779

And here’s one that disproves that:

https://www.forbes.com/sites/kimelsesser/2016/06/23/the-truth-about-womens-impact-on-corporate-boards-its-not-good-news/#108aeaec5ecb

To quote the author of the article (her last paragraph. Yes, a woman):

“In sum, women aren’t miracle workers for an organization. But, that’s OK, because neither are men. Women should be provided the same opportunities to sit on boards as their male counterparts, because it’s the fair thing to do. However, we have to stop stretching the truth in order to promote women’s opportunities in organizations. We must not fabricate results about the benefits of hiring women. And we shouldn’t have to. Female board members perform just as well as their male counterparts, and organizations who do not appoint women to their boards are stuck in the past and missing out on some great talent.”

It’s about talent, not gender/sex.

Correlation with business success does not = causation.

If more representative companies drastically outperform, let them force the male chauvinists out of business.

In reality, business success is driven by far more critical economic factors and sexual representation is somewhere closer to bottom.

I’ll take your word for it, Patrick.

Again, I don’t care about the gender or racial makeup of boards as long as they are making me, the shareholder, money.

What about redheads or short or fat people? How many short, fat red-headed CEOs do you know?

Equity or meritocracy – you can’t have both.

I don’t believe the article mentions equity, neither does it argue for it. But there can be no meritocracy when there is sytemic exclusion. Do you honestly believe that there is not a single woman in the whole of South Korea more capable and qualified than the all-male directors of 85% of the companies in this study? I find that extremely unlikely.

By looking at the % of women, the implied focus is in fact equity (equal outcomes). If the worry was equal opportunities or access the process of board appointments would rather have been the focus and ensuring that was equitable and not exclusive.

As a result of cross sectionality you will never have the right % of everything over gender, culture, sexual orientation, disabilities etc. So to start by aiming for that is a guarantee to miss the point. And what is the main focus? gender? sexual orientation? culture? When you get the one right you’ll have the other wrong, unless you search specifically for someone in all categories.

@talker: The article is not talking about % of women on boards. It is talking about % of boards that have female representation. That’s a very different statistic and does not imply a focus on equality. It is a focus on equal opportunity.

@Patrick, as i said it measures outcome. Which is what you said, it measure OUTCOME, not opportunity

@Patrick, then your article heading is misleading. “It will be 2029 before women make up 30% of company boards”. You wrote it, own up to it.

Why should this be a problem? A uterus, just like skin colour, should not be an an automatic entrance to a board position; expertise should be.

It should be a problem because expertise is clearly not the primary consideration when men are so over-represented.

Patrick, squire. Please explain: countries like Norway have no gender discrimination and actively recruit women to do STEM subjects at university. The result is that men outnumber women 20:1 in STEM fields like IT, whereas in fields such as nursing and childcare, the reverse is true. Maybe its more than expertise. Maybe its about choices. You can have equity or you can be free, but not both.

BTW isn’t gender supposed to be fluid?

The comments of TheOwl & PS are totally unacceptable …..

Shame on you……

I’m now eagerly awaiting the follow-up article of women getting higher representation on the other end of the spectrum. You know, garbage collectors and such… o, wait.

Can people stop thinking that equality of outcome is the same as equality of opportunity? It shouldn’t matter what race, orientation, sex, height weight, etc you are, so long as you are doing a good job.

It’s such a simple concept…

The irony is that you’ve identified the problem without even realising it. The issue is equality of opportunity. Currently, that does not exist in most of the world.

The irony is you missing my point completely. Women have equal opportunity, but because of personal choices, they don’t end up being the CEO’s, MD’s etc.

They choose different fields (humanitarian and social sciences). They start families, etc. Men are more driven for career goals. They are more willing to move for work, work longer hours, negotiate for advancement and raises. Men CAN’T get pregnant, that’s not an option for us, so we go the business route and excel at that.

You want to force a 50/50 thing, that is folly. Why MUST it be an equal representation? If you achieve that, what then? What is the end goal? To then have a percentage split by population, i.e. where more women are represented in all work aspects, as there are more woman than men in the world?

MrG9000, women do not choose to have children, we are the only ones with the capability to do so, so it is sort of expected of us. But having the child is not really the big problem, it is the raising of the children that requires the long term commitment. I don’t understand why men think that they are not able to raise children and just assume that women should do it all on their own. I earn the same as my husband but who does the school phone when there is a problem? They always phone me and I have to drop everything and rush to school.

And who says we are not willing to move for work, work longer hours, negotiate for advancement and raises? Have you actually taken the time ask a few of us how we feel about any of this?

Men perhaps CAN’T get pregnant but you sure as hell can help raise the children so that we can all get an opportunity to use our talents to contribute to the economy.

If we had perfect equal opportunities i would expect the % of women on boards equal to the % of say new companies of decent size created by women, lets say the investecs, psg, liberty types and smaller down to say R100m capitalization.

Those would be the strategic thinkers one would expect on board level.

We should address this topic from another angle. Individuals on the board are paid employees of the owners/shareholders. The shareholders appoint the board members. I think it is safe to say that more or less 50% of shareholders are female. There is no restriction on the ownership of shares along racial of gender lines. If you can afford it, you are free to buy it. Equal access to all. Everybody has an equal opportunity to buy shares in any public company.

This brings us to the question – if the ownership of a company is open to all, and offers equal opportunity to all, why should we involve ourselves with the appointments these shareholders make? In a free-market economy where property rights are respected, owners should have the right to appoint whoever they wish to manage their property. The demand for a certain demographic representation is an infringement on property rights.

The final point – If women own, or are free to own, 50% of the shares in companies, why do these female owners of the company not appoint female board members? Are we going to prescribe to female owners who they should appoint as board members? Are we going to restrict the right of female owners to elect male board members? Are we going to restrict the rights of women in order to advance the rights of women?

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